EDIT: Please note that Jim Rogers denies making this comment. Please read this post for his response.

The pound could collapse “within weeks”, says Jim Rogers (right), co-founder with George Soros of the Quantum Fund which took down the pound in 1992 (he is also a currency trader, presumably short the pound).

“Other currencies aren’t strong and the Euro has real problems, with cracks much wider than Greece beginning to show,” Rogers continues, “but it’s the Pound that’s most vulnerable. In real terms, it’s already devalued against virtually every currency barring the Zimbabwean dollar and it’s especially exposed over the weeks running up to the UK election. In a basket of currencies, the Pound is potentially a basket case. And that will put Britain in an extremely bad position for the shakedown.”

It is worth pointing out that it is almost exactly 13 months since Rogers said this:

“I would urge you to sell any sterling you might have,” said Rogers. “It’s finished. I hate to say it, but I would not put any money in the U.K.”

That isn’t to say he’s wrong; the British economic position is dire, the Bank of England might resume printing money, and both Labour and Conservatives are desperately avoiding spelling out cuts for fear that they will lose votes. But just because he’s a “financial guru”, doesn’t mean he’s always right, either.

Two numbers from the RBS results (for anyone who has forgotten, Royal Bank of Scotland is 82% owned by the taxpayer thanks to its bubble-fuelled expansion):

1. The tangible common equity ratio is 5.2%, up from 2.4% in 2008. In other words, its shares are more than 19 times leveraged. They were almost 42 times leveraged a year earlier, but still – not much of a cushion for the shareholders here. (For 2013 they want to keep the “leverage ratio”, which is based on the larger tier 1 capital rather than equity capital, below 20 times.)

2. Stephen Hester, chief executive, has set a target return on equity after the bank has been restructured of more than 20% in commercial banking, and of 15-20% in investment banking. Both numbers taken from the slide presentation (pdf).

Neither of these is compatible with building a safe bank: the high hoped-for returns to shareholders come only because the bank will be taking big risks through its leverage, even if those risks will be lower than in the past. Unless we can get rid of the too-big-to-fail problem, RBS will be putting out the begging bowl to taxpayers again come the next crisis. It is not even planning to be a safe bank.

RBS is being restructured and run to serve customers well, to be safe and stable and to restore sustainable shareholder value for all. That is our legal duty and it is our intention and desire. It is also the only way taxpayers will recover the support they have given us.

There are many bigger issues here, particularly the impact on the economy of lower bank leverage (slower growth, but less painful busts). But just in case you were thinking of voting for David Cameron in order to buy subsidised shares in RBS, be aware that it is far more of a gamble than any new “Tell Sid” campaign is likely to make clear.

As an aside, RBS mentions the risks to the economy from tighter regulation in its presentation, but at least accepts that moves are needed to remove hidden state guarantees:

Thrust of regulatory change is appropriate and considered
-Key 2010 issue is “calibration” and “timetable”. Absent some “give” on both, negative consequences to economic growth and industry returns

Key medium term issue is reform to remove implicit state subsidy in times of systemic crisis
-Will take years. Solution not in individual size or shape. Needs combination of safer banks (more capital, safer funding, better risk management), and transparent, predictable crisis resolution mechanisms (loss hierarchy, “Chapter 11″ for Banks)

I don’t want to get deeply into the rights and wrongs of the killing. But it raises again the question of when it is acceptable for governments to break the law in friendly states. Governments have been doing a lot of lawbreaking in recent years, not just prompted by the so-called war on terror. Most recently, the illegal purchase by German secret services of Liechtensteinian and Swiss bank data and the subsequent planned purchase of that data by the British tax office – receiving stolen goods – added less serious crimes than the kidnapping and murder that had been going on.

(My view of the assassination: either 1. Israel is at war with the Palestinians, or at least the militant groups, in which case fair enough to kill them – but they should not be labelled as terrorists, if it is a war, or treated as terrorists by other states; or 2. it isn’t at war, in which case extra-judicial killing is just another word for state-sponsored murder, reducing Israel to the level of the terrorists. Either way, it seems unlikely that more tit-for-tat killings will make any serious difference to Israel’s security – particularly if they damage relations with allies, as Daniel Korski at the Spectator pointed out.)